COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis.

COVID-19 remains a global crisis and we realize that many people need to keep up with COVID-19 developments, particularly since we are moving into the more critical stage (“restart economy”), so feel free to share our commentary to anyone who has interest.


Today, we saw a trifecta of developments that dampened/tapered expectations around COVID-19.  Dr. Fauci made his testimony and commented on several topics including the risks of re-opening too quickly, how schools are challenged, and downplayed the timeline for vaccine development.  Congress (House Democrats) unveiled the $3T stimulus package but without bi-partisan agreement (=bad) and our Policy Strategist, Tom Block, does not see this bill passing before Memorial Day.  And the third impact was the comments by investment scion, Stan Druckenmiller, who was speaking on the Economic Club of NY webcast, and he generally saw downside risks to the economic recovery and to markets (see discussion at end of this commentary).

An abstract of Tom Block’s thoughts is below and I highlighted some key thoughts. 

– this is not a bi-partisan agreement, so the timeline is slower, as Senate Republicans and White House will review it;
– there is $1,200 per PERSON, not family and up to $6,000 per family;
– Tom expects this to pass after Memorial Day, at the earliest

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis.



The somewhat sobering tone to these developments, coupled with normal profit taking, led to stocks falling 2% today.  And reversals were seen in the large-cap secular growth leaders.  But not all the news was bad.  A CNN poll released today showed that a meaningful rise in Americans believe the worst is behind us compared to a month ago — 44% vs 17% a month ago.  Yes, the majority of Americans still see the worst ahead (see Point #3) but a shrinking margin.  But it seems very partisan as the swing is entirely due to Republicans.  These respondents moved from 70% (in April) seeing ‘worst is ahead’ to 71% now saying ‘worst is behind.’  So it is not clear where the public really stands.  And continues to the reality that the public, policymakers and investors are uncertain –> uncertain = bearish from an investment positioning standpoint.




POINT #1: USA COVID-19 new cases rise to 21,677, +4,024 vs yesterday, 4 states account for most of the increase –> IL, FL, CT and PA
Total new COVID-19 cases rose to 21,677, up +4,024 from Monday’s reported new cases and about flat with the tally from 2D ago.  Testing was down today to 254k from 422k yesterday, so the rise in reported cases comes as there were fewer tests administered.  As has been the case for the past few weeks, the data early in the week tends to be lower than midweek.  And our data scientist, tireless Ken, also informed me that Kansas is now only reporting COVID-19 data 3X per week (M/W/F).

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 1

Source: COVID-19 tracking project


Totals tests have been in the 300k range for the past week or so and today’s figure is much lower.  But the overall testing capacity of the US is rising and thus, we expect this figure to increase in weeks ahead.  In fact, Melinda Gates, of the Gates Foundation, on CNBC today discussed the urgency of massively expanding testing in the US.  

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 2


Source: COVID-19 tracking project.

4 states account for most of the rise: IL, FL, CT and PA.  Illinois had a sizable surge to >4,000 cases reported today.
The 50 states daily reported cases are below.  And as the pattern for COVID-19, reporting lags, particularly over the weekend, cause mid-week case figures to surge.  Today, 4 states account for most of the rise:

– IL      4,014 vs 1,266 1D ago     +2,748
– FL       941  vs    386                    +555
– CT      568   vs   211                     +357
– PA       837  vs   543                     +294
Total 4 states                               +3,954  (98% of the increase)


These 4 states accounted for the bulk of the increase.  IL rise was so sizable, it is the highest reported total for any state today and CA and NY are #2 and #3.  It is interesting that NY state is now #3.

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 4


Source: COVID-19 tracking project


Illinois testing surged to >30,000 today, which explains the rise in reported cases…
IL testing really surged in the past day.  The previously highest levels were around 20,000 in a single day and today, the total reported tests were >29,000.  This mostly explains the 1D surge to >4,000 cases.  But now IL has more reported daily cases than NY.

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 3

Source: COVID-19 tracking project

NY state reported cases fell again to 1,430 and is now 87% off the peak from 38 days ago…
NY state continues to show steady improvement in reported cases.  NYC data continues to be quite lumpy and we did not include today as we need to verify why the new cases reported by NYC in the past 2 days exceed that reported by the state. 

– Gov Cuomo today in his live briefing continued to point to the 3 counties that meet the 7 criteria needed to open.  And he does not plan to extend the statewide stay-at-home order beyond this Friday 5/15/2020.

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 5


source: NY Dept of Health


California cases are in an overall flat/downtrend but not sufficiently and consistently declining to justify moving to Stage 2

CA reported 1,443 cases, which is up from 1D ago and that is higher from Sunday.  But as you can see in the daily case counts for CA, the data tends to be lumpy, and likely due to lags in testing.  While CA Gov Gavin Newsom has not formally extended the stay-at-home orders, the LA Public Health Director today commented that the stay-at-home would likely continue to at least through July (see next section).

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 6


source: CA Dept of Health


POINT #2: Los Angeles County Public Health Director says stay-at-home orders will ‘with certainty’ be extended through July

LA County’s Public Health Director, Barbara Ferrer, stated the stay-at-home orders would ‘with all certainty’ be extended for the next 3 months — she made these statements at a Board of Supervisors meeting.  And while this is not an “official” extension, barring any new changes in virus or ‘tools at hand’, this order would not be shortened.

LA County is still easing some restrictions despite the extension of ‘stay-at-home’ orders:
– Beaches are set to open Wednesday.
– Curbside retail-pickup has been given the greenlight and manufacturing can resume.

We covered many of these topics in a prior FLASH, so apologies for the redundancy.


COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 7


https://www.latimes.com/california/story/2020-05-12/coronavirus-beaches-reopen-los-angeles-county-move-toward-new-normal



The bar is really high for a CA county to move to Stage 2…
Much of the state has moved into Stage 1 (curbside retail, manufacturing etc) but the move to Stage 2 is a more meaningful step in GDP terms.  Under Stage 2, many restrictions are eased:

– Offices open
– Seated dining at restaurants
– Shopping malls open
– Outdoor museums open

Given CA has quite a lot of tourism and large malls, this Stage 2 is a more critical step.


COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 8

Source: https://www.gov.ca.gov/wp-content/uploads/2020/05/5.7.20-Presentation.pdf

But as shown below, the criteria is very high. Or at least, we view this as quite high:

– Less than 1 case/ 10k residents in past 14D
– No COVID-19 deaths in past 14D

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 9


https://www.gov.ca.gov/wp-content/uploads/2020/05/5.7.20-Presentation.pdf


LA County has 10 million residents.  Thus, LA county cannot exceed 1,000 cases in the past 14D (presumably per day).  We have listed LA county’s daily case counts below.  

– In the past 14D (shaded grey), the county >1,000 on 3 dates –> 4/29, 5/1 and 5/5.
– So the earliest LA could meet this 14D case count threshold is after 5/19/2020 (14D later).


COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 10


Source: LA County Health Dept.


R-0 Los Angeles County is 0.40, so the virus spread is on the decline…and is the best among the top 5 largest counties in CA
One way to gauge the spread of COVID-19 is to look at the R-0 value (basic reproduction rate).  We highlighted the R0 for the 50 states yesterday and showed NY state was among the best now at 0.56.  Los Angeles County is even better, with a value of 0.40.  

– LA county is taking an abundance of caution and as policymakers, they have a very challenging decision ahead.  

But the data suggest that LA county’s suitability to open may be better than suggested by the criteria established.

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 11


Source: Fundstrat, rt.live




POINT #3: The most recent CNN survey shows the perception of the COVID-19 crisis is partisan by a huge margin…
We decided to look at public survey sentiment today, to get a sense for where the public (USA) sees the COVID-19 crisis.  Most of our work to date has been to focus on the official statistics reported by governments, so it might make sense to see how the public perceives the crisis relative to the data that we have tracked.  One of our ‘go to’ sources for survey aggregation is FiveThirtyEight which was founded by Nate Silver.  He was formerly with the NY Times and has produced great analysis around voting probabilities (fivethirtheight.com).  

69% of Americans are ‘somewhat’ or ‘very concerned’ about COVID-19 infection…
There remains considerable fear about catching COVID-19 with 69% ‘somewhat’ (36%) or ‘very’ concerned (33%).  Nearly 1 in 3, based on aggregated surveys, is very concerned.  And the opposite view, ‘not at all’ (11%) and ‘not very’ (19%) tallies to the 1 in 3.  So the distribution is still highly concerned.

The high level of concerns is not preventing Americans from venturing out, evidenced by the surges in Apple Mobility, Google location services, OpenTable, traffic statistics and increasing road traffic. 

But this high level of concern certainly is an obstacle to returning to a status that might look “normal” — this is where confidence in healthcare mitigates these concerns, and as we have commented in past FLASHES, we view treatment > vaccine > testing.  Basically, because serology suggests a higher prevalence of COVID-19, we think treatment, to prevent serious illness and death, is more urgent than a vaccine.

– Compared to a month ago, the number ‘very’ concerned has fallen from >36%, so there is a modest reduction in this category.


COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 12


source: https://projects.fivethirtyeight.com/coronavirus-polls/


Not surprisingly, 87% of Americans are worried the economy…

The aggregated survey data shows 87% of Americans are worried about the economy, with 57% ‘very’ worried.  About 3% are ‘not at all’ worried about the economy.  I don’t know how to assess this survey result specifically because it is a broad question — it not asking about the respondent’s personal situation, but the survey questions generally are about the COVID-19 effect on the economy.   So 100% probably should be concerned.  But 87% is pretty close to 100%.

– the views by respondents have been largely pinned at these levels since 3/29/2020.
– so, one could infer that the horrific economic data and the actual carnage in the economy have not changed view much.

I think this latter point is interesting and worth watching.  If economists are correct and the US economy bottomed in April, there should be a perceptible change in the clustering of the responses.  And if not, this creates potential divergences that might have investment implications.

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 13



https://projects.fivethirtyeight.com/coronavirus-polls/



CNN Poll shows significant partisanship in view of ‘coronavirus outbreak’…
Nate Silver also flagged the latest CNN poll today on twitter (see screenshot below, link to the story itself –> https://www.cnn.com/2020/05/12/politics/cnn-poll-federal-government-handling-of-coronavirus/index.html).  According to CNN, the poll was conducted by SSRS May 7 through 10 among a random national sample of 1,112 adults (reached on landlines or cellphones by a live interviewer) and sampling error of plus or minus 3.7 percentage points.

The most intriguing aspect is the partisan nature of the responses.  

– 71% of Republicans say ‘worst is behind us’
– 74% of Democrats say ‘worst is yet to come’

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 14


Source: http://cdn.cnn.com/cnn/2020/images/05/12/rel5a.-.coronavirus.pdf


The survey detail (page 11) shows this breakdown, by other parties as well. But the starkest difference is between Republicans and Democrats.  Independents are more 50/50.

– overall, 52% of respondents say ‘the worst is yet to come’ –> but this is merely the blend of a bi-furcated view.

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 15


Source: http://cdn.cnn.com/cnn/2020/images/05/12/rel5a.-.coronavirus.pdf


In the past month, the % of respondents saying ‘worst is yet to come’ dropped from 80% to 52%…
The prior survey was conducted a month earlier (page 3) and we can get a sense of how respondent views changed in that period of time.  It is moving in a positive direction:

– The % saying ‘worst is yet to come’ has dropped -28% to 52% (from 80%)
– a month ago, 80% of respondents say ‘the worst is yet to come’ and that was pretty accurate as cases peaked on 4/24/2020 (ex-NY, they peaked 5/1/2020).  

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 16



Source: http://cdn.cnn.com/cnn/2020/images/05/12/rel5a.-.coronavirus.pdf


And according to CNN, the entire shift in views is explained by Republican respondents, which saw their views change from 70% ‘worst is yet to come’ to 71% saying ‘worst is behind us’.

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 17


https://www.cnn.com/2020/05/12/politics/cnn-poll-federal-government-handling-of-coronavirus/index.html


We conducted our own twitter poll, just to see if it calibrates with the CNN poll.  The poll was only 5 hours live as of this writing (we set to a 24-hour poll)  and we had ~3,500 respondents.  We tried to use the same language used in the CNN poll, so the question would have the same type of answer.  Both are relatively vague.

– 53% says the ‘worst’ is behind us.  It is a bit more than the CNN survey (44%) but not by a wide margin.

The takeaway is the public remains cautious.

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 18


source: twitter

STRATEGY:  Consensus –> “public” very concerned + “retail” investor cautious + “institutions” uncertain BUT yield curve + oil “positive”
The takeaway from our commentary is that the public remains quite cautious (Republicans much less so) and is even evidenced by the extremely cautious policy actions in CA (Los Angeles County).  

Investors remain quite cautious.  We see this in our dialogues and Zoom calls with our institutional investor clients.  And from the emails and queries we receive.  But we are not surprised by this at all.  There is no economic visibility, and this naturally tilts investors to be uncertain.  And uncertain = bearish, from a positioning perspective.  This is rational and understandable.

In fact, Stan Druckenmillers even noted the “risk-reward in stocks is worst he’s seen” in his career.  He made these comments at a  webcast of the Economic Club of NY event (I am a member, it is a great organization).  The Bloomberg article below summarizes his comments from that webcast.


COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 19


https://www.bloomberg.com/news/articles/2020-05-12/druckenmiller-says-v-shaped-recovery-for-u-s-is-a-fantasy


AAII retail survey “bulls less bear” is worst since Feb 2016 and since 2009, seen only a handful of times…
The broad consensus of the public, investors and even retail investors is uncertainty + bearishness (as we said, positioning is the same under either).   Our favorite retail investor survey is the AAII % bulls less % bears survey.. This survey has been conducted weekly since 1987 and we view as a reliable contrarian indicator at the extremes.

– for the survey in the latest week (last Thursday publication), the AAII bulls less bears dispersion was -29%
– this reading was only lower in Feb 2016 and before that April 2013.  In retrospect, both were major equity market lows.

The survey respondents tend to be “older” and thus, has a skew.  But older adults also have greater wealth to invest.

COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 20


source: AAII and Fundstrat

Since 1987, this survey has served as a solid contrarian indicator at the extremes.  As shown below, at the “negative” extremes, or bottom decile, forward returns for the S&P 500 are quite strong 1M and 6M forward. The current -29% is at the lowest decile.

– the best 1M and 6M forward returns are seen at the lowest decile with 1.5%/6.7%, respectively.  


COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 21


source: AAII and Fundstrat


The future is uncertain.  And we certainly have no crystal ball.  But the fact that the public, retail and institutions are quite “cautious” means a lot of bad news is already discounted in stocks.  And another curiosity is the steepening of the yield curves.  Below is the plotting of two curves:

– 10Y-2Y (shorter term)
– 30Y-10Y (long term)

And note how both have steepened sharply since mid-March?  Rob Sluymer, our Head of Technical Strategy, sees this as tactically positive for risk-on assets.  Translation, this is good for stocks.


COVID-19 UPDATE: USA cases rise +4,024 to 21,677 on 4 states (IL, FL, CT and PA). Survey data reinforces partisanship in viewing this crisis. 22


Source: Bloomberg

More from the author

Disclosures (show)

Stay up to date with the latest articles and business updates. Subscribe to our newsletter

Articles Read 1/2

🎁 Unlock 1 extra article by joining our Community!

Stay up to date with the latest articles. You’ll even get special recommendations weekly.

Already have an account? Sign In

Want to receive Regular Market Updates to your Inbox?

I am your default error :)